In an uncertain trade world

is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:

The problem with writing about trade (and I have to write about trade considering the name of this column is Trade Tripper) is that events have taken a turn for the mundanely esoteric, not to mention cynicism-inducing repetition, that it’s difficult to discuss something that is concrete, relevant, or even new. So readers will perhaps feel excused if this article provides a feeling of deja vu (didn’t I say that already?), but where we are right now is exactly where we are right now.

WTO Director-General Pascal Lamy gave a report to the General Council last Feb, 22, 2011, where he expressed his being "encouraged" by the recent talks he had with WTO senior officals regarding the state-of-play of the negotiations. However, as always, this must be tempered (or is it conditioned?) by his declaration that "a major acceleration at all levels -- multilaterally, plurilaterally, and bilaterally -- is needed." Ominously, he adds that "the window of opportunity is still there, but it is narrowing every day."

Again, the problem is: we’ve heard all this before. However, there are some distinct features present this time around that make any analysis today regarding Doha a little different than before. And it’s mostly not for the good.

This Round, clearly, has seen several deadlines missed. Some spectacularly, such as what happened in Cancun. The issue really boils down to the inability to achieve consensus on Doha’s development agenda, whereby poorer countries could acquire greater market access in the rich country markets. Unfortunately, progress in this regard comes in trickles, with discussions getting bogged down on the intricacies of tariff cuts. Though new negotiating revised drafts were announced to be submitted by April, with a full Ministerial Conference (as opposed to the "mini-Ministerials") to follow by July, nevertheless, optimism is not very high.

Aside from the General Council meeting, as well as the informal meeting at Davos, the Trade Negotiations Committee has held only one informal meeting last Feb. 2, 2011, which "reviewed and assessed developments in the Doha Development Agenda." Note that, even then, the Trade Negotiations Committee meeting actually resulted in the failure to achieve anything resembling forward moevement. While perhaps the reason could be due to global economic uncertainties, nevertheless, a significant degree of resposibilty lies with the US’ Obama administration. The US. presently seems to want it both ways: failing to show leadership in the talks by showing a pronounced lack of interest on the matter, while at the same time appealing to the sensibilities of poorer developing countries by constantly submitting texts that apparently provide greater market accesss (as well as special and differential treatment) for the latter. Which would be fine but considering what is needed at this stage is the convergence of the texts, the only tangible result of all those recent US efforts is to instead slow down the talks even more.

This has actually emboldened some commentators to come out with some eccentric, albeit old, arguments. For instance, Daniel Altman of Newsweek gleefully calls for "good riddance" to the WTO, saying that "trade negotiations would actually go much further if the WTO simply closed down its talks altogether." His argument essentially is that "this is where the future of free trade lies: in pragmatic regional deals, not utopian global ones ....The majority of nations can simply leave the obstructionists behind and move forward with regional trading partners. Eventually, most of the world’s trading nations will arrange themselves into just a few big blocs."

All this looks good, perhaps even rational. But there are flaws to this reasoning. And definitely, for a developing country like the Philippines, it should be disconcerting. The argument above is designed to benefit developed countries. For developing countries, with its limited resources, the reverse is true. For the simple reason that free trade agreements are not free.

Their very nature and number provides for an increasingly complex international trading system. Considering there have been concerns raised regarding the capacity of the Philippines to keep up with its multilateral trading commitments, this obviously would be multiplied in view of the inevitable proliferation of FTAs should the WTO indeed be waylaid. Among areas of concern would be the varied ROOs, dispute settlement jurisdictions, ambiguous customs procedures, SPS and TBT measures, and -- perhaps -- the issue of smuggling. That’s why our low utilization rate is quite understandable. After almost 20 years, our AFTA utilization remains at around 20%.

Either way, the challenges remain high. We’re either faced with a full-blown Ministerial that bring an enduring set of agreements imposing a fresh set of demands on the country. Or we could end up with an interweaving set of free trade agreements that could push our government bureaucracy and businesses to the limit. Which brings us back again to this one question: do we have the officials with the capabilities and expertise to meet these challenges? The answer might come sooner than we know.